Report from the Commission - Second Commission Report based on Article 6 of the Council Framework Decision of 26 June 2001 on money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds of crime. {SEC(2006) 219}
Date: 2006-02-21
Institutions: European Commission
Subjects: EU Member State, confiscation of property, fight against crime, judicial cooperation in criminal matters in the EU, money laundering, organised crime, penalty, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.02.2006 
COM(2006) 72 final 

REPORT FROM THE COMMISSION  

Second Commission report based on Article 6 of the Council Framework Decision of 26 
June 2001 on money laundering, the identification, tracing, freezing, seizing and 
confiscation of instrumentalities and the proceeds of crime. 

{SEC(2006) 219} 

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1. 

INTRODUCTION 

This  second  evaluation  follows  on  from  the  Commission  Report  of  5  April  20041 
established on the basis of Article 6 of the Council Framework Decision of 26 June 2001 on 
money  laundering,  the  identification,  tracing,  freezing,  seizing  and  confiscation  of 
instrumentalities  and  the  proceeds  of  crime2.  The  Council,  at  its  meeting  on  25  and  26 
October  2004,  took  note  of  the  Commission  report  and  called  on  the  Member  States  which 
had  not  yet  fully  complied  with  the  Framework  Decision  to  do  so  as  soon  as  possible  and 
provide  information  on  the  progress  achieved.  It  decided  that  there  should  be  a  second 
evaluation report and asked the new Member States, which had not, of course, been covered 
by  the  first  evaluation,  to  transmit  the  relevant  information  relating  to  the  transposal  of  the 
instrument into their respective legal orders. 

The deadline for supplying the information was set at 31 December 2004, but even so 
the Member States were not all able to answer within the time allowed. The Commission sent 
a reminder by letter dated 4 March 2005, followed by a final reminder by e-mail in June, so 
that  by  the  end  of  July  2005,  only  one  of  the  new  Member  States  (MT)  had  not  sent  the 
information  to  the  Commission.  The  only  two  Member  States  (AT  and  PT)  which  had 
provided no information in time for the first evaluation transmitted substantial information in 
the  meantime.  Sadly,  however,  certain  Member  States  which  had  been  judged  to  have 
complied  only  in  part  with  the  Framework  Decision  or  had  not  provided  sufficient 
information to enable the Commission to discharge its analysis function have still not done so. 
The information provided by GR is particularly inadequate. Only DE, IT, SE and the UK have 
supplied supplementary explanations based on the remarks in the first report. 

This report substantially covers the Member States not covered by the first one. The 
report presents a consolidated view of the situation in those which were covered by the first 
report  but  have  provided  explanations  since  then.  Only  the  answers  that  reached  the 
Commission before 30 July 2005 have been taken into account. 

Given the maximum length of documents that can be translated into all the European 
Union languages, only a summary of the answers under Articles 2, 3 and 4 is presented in this 
document3. 

2. 

ANALYSIS  OF  NATIONAL  MEASURES  TAKEN  TO  COMPLY  WITH  THE 
FRAMEWORK DECISION 

2.1. 

Article 1 Reservations in respect of the 1990 Convention 

2.1.1.  Article 1(a): Reservations in respect of Article 2 of the 1990 Convention  

The  first  evaluation  stated  that  three  states  (GR,  LU  and  SE)  had  not  complied  with 
Article 1(a). SE supplied additional information by letters dated 30 August 2004 and 29 June 
2005. The Criminal Code Amendment Act of 19 May 2005, which came into force on 1 July 
2005, extends the confiscation procedure to the other offences punishable by a sentence of at 

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COM(2004) 230, 05.04.2004. 
OJ L182, 05.07.2001, p.1. 
A detailed report is available in the attached SEC document. 

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least one year.  The  reservation continues to apply for the confiscation of the proceeds from 
tax offences, but the Framework Decision allows such an exception. 

Nine  of  the  ten  new  Member  States  comply  with  Article  1(a).  MT  has  confined  the 
application  of  Article  2  to  offences  classified  as  crimes  under  Maltese  law,  by  a  statement 
deposited on 19 November 1999. 

2.1.2.  Article 1(b): Reservations in respect of Article 6 of the 1990 Convention  

Four  States  (AT,  GR,  LU  and  PT)  were  considered  in  the  first  evaluation  as  having 

deposited reservations not complying with Article 1(b).  

PT notified information to the effect that an amendment to its Criminal Code stipulates 
that  the  underlying  offences  include  all  misdemeanours  punishable  by  a  term  of  at  least  six 
months and a maximum of five years. 

There is an AT reservation confining the underlying offences to crimes which, under 
the Austrian Criminal Code, incur a sentence of more than three years. AT considers that this 
is  compatible  with  the  wording  of  Article  1(b),  since  it  regards  itself  as  a  country  having  a 
scheme  of  minimum  penalties.  These  minimum  sentences  exist  on  the  basis  of  offences 
punishable  by  a  custodial  sentence  of  at  least  five  years.  But  there  are  also  offences 
punishable  by  a  three-year  sentence  or  less  (but  more  than  one  year)  which  do  not  carry  a 
minimum  penalty.  Such  offences  are  currently  excluded  from  Article  6  of  the  1990 
Convention  because  of  Austria's  reservation,  which  means  that  it  does  not  comply  with 
Article 1(b). 

GR declares that a bill currently subject to consultation would repeal the reservations 
in  respect  of  Articles  2  and  6  contained  in  Act  2655/1998.  The  bill  would  create  three 
categories of money-laundering precursor offences. In addition to a specific list of offences, 
the  bill  would  supplement  the  definition  of  the  underlying  offence  by  including  offences 
punishable by imprisonment (the threshold remains to be determined) and offences punishable 
by imprisonment, the threshold of which also remains to be determined, which have generated 
illicit profits in an amount exceeding a threshold not yet determined. It is not yet possible to 
determine whether the bill would finally remove the objections set out in the first report. 

In  the  absence  of  further  information,  it  is  not  possible  to  consider  that  the 

unfavourable remarks addressed to LU following the first evaluation can be withdrawn. 

Eight of the ten new Member States comply with Article 1(b). But MT has confined 
the  application  of  Article  6(1)  to  offences  classified  as  crimes  under  Maltese  law,  by  a 
statement  dated  19  November  1999.  HU  has  confined  the  application  of  Article  6(1)  to  the 
underlying offences defined in its Criminal Code by a declaration of 2 March 2000. 

2.2. 

Article 2: Penalties 

The first evaluation stated that the eleven countries which had transmitted information 
complied with Article 2. But DK, FI and SE legislation provided for penalties complying with 
Article  2  only  in  the  event  of  serious  or  aggravated  money-laundering.  The  basic  offence 
remained punishable by a penalty below what the Framework Decision prescribed. 

SE wished to specify that there was no real difference between its national system and 
those operating in most of the other countries, since sentences routinely match the seriousness 

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of  the  offence,  whether  the  relationship  between  seriousness  of  offence  and  of  penalty  is 
stated in explicit terms, as in Sweden, or not, as in the other European legal systems, where 
the court has a greater discretion to make the punishment fit the crime. The Swedish answer 
therefore provides supplementary information in support of the statement that it complies with 
Article  2.  Beyond  the  assessment  of  this  segmented  structure  of  penalties  existing  in  these 
countries,  only  a  detailed  analysis  of  the  case-law  would  make  it  possible  to  compare  the 
actual  degree  of  severity  of  the  various  European  legal  systems  in  relation  to  money-
laundering, which would be out of place in this report. AT also mentioned that it had to take 
account  of  the  consistency  of  legal  systems  to  justify  its  sentencing  guidelines  inspired  by 
similar considerations.  

However,  sentencing  tariffs  could  have  unexpected  and  undesirable  effects  on  the 
implementation  of  Framework  Decision  2005/212/JHA.  In  the  field  of  money-laundering 
offences,  the  strengthened  confiscation  powers  referred  to  in  Article  3  apply  where  the 
offence  is  committed  within  a  criminal  organisation  and  is  punishable  by  a  maximum 
sentence of at least four years’ imprisonment. 

It  would  therefore  be  helpful  to  ensure that  money-laundering  by  organised  crime  is 
systematically  treated  as  “particularly  serious  or  habitual”  (DK)  or  “extensive  and 
professional”  (FI)4.  More  generally,  there  is  the  question  whether  the  offence  of  (non-
aggravated) money-laundering is regarded as a distinct offence from the aggravated offence5 
for the purposes of the application of Framework Decision 2005/212/JHA. 

GR  did  not  provide  documentary  information  making  it  possible  to  assess  the 

implementation of Article 2. 

Among the nine new Member States which transmitted information: 

-  Hungarian  legislation  provides  for  automatic  exemption  from  prosecution  for  any  person 
who  discloses  facts  relating  to  money-laundering  to  the  police,  or  begins  doing  so.  This 
exemption appears excessive because it also seems to be able to benefit a "brazen" launderer, 
i.e.  one  who  discloses  his  money-laundering  activities  to  the  police  to  be  eligible  for  this 
exemption.  Moreover,  it  must  be  mentioned  that  under  Hungarian  legislation  a  person 
commits  the  offence  of  money-laundering  only  in  the  course  of  his  professional  activities, 
which appears unduly narrow; 

- a bill adopted by the Government of the Czech Republic on 9 June 2004 raises the maximum 
sentence for the basic offence from two to four years, but introduces a provision whereby, in 
the event of concurrent sentences, the penalty incurred for the underlying offence prevails if 
the  penalty  imposed  for  the  underlying  offence  is  lighter  than  the  penalty  imposed  for  the 
money-laundering  offence.  It  is  difficult  to  evaluate  the  true  scope  of  this  measure,  but  it 
seems that the Czech Republic should modify this detail of its bill so that its future legislation 
is fully compliant.  

2.3. 

Article 3: Value confiscation 

The  first  evaluation  determined  that  value  confiscation  was  possible  to  varying 
degrees, but at least as an alternative measure (though sometimes confined to specific cases or 

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For example. 
And, in Austria, recycling by third parties of the assets of criminal or terrorist organisations. 

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to certain types of offences or of assets) in the domestic procedures of eleven Member States 
(BE, DK, DE, FR, IE, IT, LU, NL, FI, SE and UK) and in at least nine Member States (BE, 
DK, FR, IE, IT, NL, FI, SE and UK and probably DE) as regards foreign applications. 

LU  and  ES  indicated  at  the  time  of  the  first  evaluation  that  they  were  preparing 
legislation  to  supplement  their  national  mechanisms  in  line  with  Article  3,  but  progress  in 
their legislative procedures has not been reported. 

GR stated that it complied with Article 3 but did not provide the text of the relevant 

provisions. 

2.3.1.  Domestic proceedings 

The  information  gathered  in  the  second  exercise  shows  that  the  value  confiscation 
procedure is widely used, at least where it is impossible to confiscate the proceeds of crime. 
IT, PT, LT, PL, CY, CZ, SK, SI and HU therefore appear to comply with Article 3 as regards 
domestic internal procedures. In Austria, Article 20 of the Criminal Code stipulates that a fine 
for  undue  enrichment  can  be  imposed  on  persons  having  committed  offences  in  amounts 
corresponding  to  the  profits  from  the  offence  committed  or  received  for  committing  it.  No 
fine  is  imposed  if  enrichment  does  not  exceed  €21 802,  which  is  much  higher  than  the 
threshold  in  Article  3.  Information  from  LV  seems  to  suggest  that  there  is  no  provision  for 
value confiscation.  

2.3.2.  External requests 

All  the  Member  States  have  ratified  Council  of  Europe  Convention  No  141,  which 
requires  the  Parties  to  adopt  the  necessary  measures  to  accede  to  external  requests  for 
confiscation of sums of money corresponding to the value of the crime. 

The first evaluation report noted the relatively vague character of explanations given 
by certain Member States. The information gathered at the end of the second phase, although 
precious, leads to the same conclusion. A distinction is made for the proposal for amendment 
proposed by DE, which might help clarify its situation in relation to Article 3. 

2.4. 

Article 4: Processing of requests for mutual assistance 

According  to  this  Article,  requests  for  mutual  assistance  from  other  Member  States 
which  relate  to  asset  identification,  tracing,  freezing  or  seizing  and  confiscation  of  the 
proceeds must be processed with the same priority as is given to such measures in domestic 
proceedings. 

The  first  evaluation  stressed  that  the  Commission  had  not  received  sufficient 
information  from  the  Member  States  to  consider  that  this  provision  had  been  transposed 
specifically. 

The  information  received  since  then  generally  refers  to  the  application  of  the  1990 
Council  of  Europe  Convention  (CY,  CZ,  SI),  to  legislative  instruments  governing  the 
conditions  for  acceptance  of  foreign  requests  (AT,  CY,  SE,  EE  and  HU)  or  to  subordinate 
legislation  guiding  the  judicial  authorities  in  the  acceptance  of  such  requests  (DE,  PT). 
Without calling into question the content of the information provided, the Commission would 
merely repeat the same remark as it is clear that an effective evaluation of the implementation 
of Article 4 requires different evaluation techniques.  

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The  new  provisions  contained  in  Council  Framework  Decision  2003/577/JHA  of  22 
July  2003,  with  which  Member  States  were  required  to  comply  before  2  August  2005,  fit 
implicitly into the prospect for better application of Article 46. Work in hand on the principle 
of mutual recognition of confiscation decisions obeys the same logic. Rapid adoption of this 
Framework Decision would without doubt constitute significant progress. 

2.5. 

Article 7: Territorial application 

Article 7 provides that the Framework Decision is to enter into force in Gibraltar as soon as 
the 1990 Council of Europe Convention applies there. The UK pointed out that this condition 
is not met and that no measures are in preparation to fill the gap. 

3. 

CONCLUSIONS 

The situation concerning the transposal of the specific provisions is now as follows: 

Article  1(a):  Greece,  Luxembourg  and  Malta  will  probably  have  to  reformulate  their 
reservations in respect of Article 2 of the 1990 Convention. 

Article  1(b):  Austria,  Greece  and  Luxembourg  still  do  not  seem  to  meet  the  necessary 
conditions. Among the new Member States, the reservations  entered  by Malta and Hungary 
do not seem to comply. 

Article 2: All the Member States which answered comply with this Article. But three remarks 
could be made: 

– 

– 

– 

The Czech Republic could amend a provision of a bill on the matter to make it fully 
compliant; 

Hungary might have to reformulate the provision automatically exempting all those 
who  reveal  money-laundering  activities  and  its  definition  of  the  offence  of  money-
laundering; 

The maximum penalty complying with Article 2 is provided for only where the court 
convicts  for  the  aggravated  money-laundering  offence  (Austria,  Denmark,  Finland, 
Sweden, Czech Republic, Slovakia). 

Article  3:  Value  confiscation  seems  to  be  available  to  varying  degrees,  but  at  least  as  an 
alternative measure (even if it is sometimes confined to specific cases or to certain types of 
offences or of assets), in the domestic procedures of most of the Member States. Latvia is the 
only  exception  and  does  not  seem  to  have  such  a  procedure.  In  Austria  the  confiscation 
procedure applies only above a threshold that exceeds the provisions of Article 3. Regarding 
foreign requests, there is little additional information to supplement the analysis from the first 
evaluation. The new Member States that have provided information generally stated that they 
complied with relevant international instruments. 

Article  4:  The  Commission  still  considers  that  it  has  not  received  sufficient  information  to 
consider that this provision has been specifically transposed. The Commission considers that 

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Doc. 14622/04 COPEN 135, 17.12.2004, and 14622/04 REV 1 COPEN 135, 17.1.2005. 

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the  implementation  of  this  article  will  be  facilitated  if  on-going  projects  concerning  the 
mutual recognition of confiscation decisions are brought to a conclusion . 

Article 7: This provision has still not been transposed by the United Kingdom. 

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